U.S. Factory Orders ‘Bounce’ within a Deadly Downtrend

This morning, the U.S. Department of Commerce reported that March factory orders rose 1.1% from February—more than the 0.6% expected. Good news? Not if you look back; March factory orders actually declined for the 17th consecutive month on a year-over-year basis, dropping 4.2% from a year ago.

Nothing goes straight down on a month-to-month basis. Little dead cat bounces are always a possibility. That’s why it’s important to look back a year and see what the trend is telling you, because as an investor, the trend is your friend. In 60 years, the U.S. economy has never suffered a 17 month continuous year-over-year drop in factory orders without being in a recession. Here is the year-over-year chart of orders. Most ski hills don’t slope this much.

The March bounce amounted to just $5 billion in sales. March generated $458 billion in sales compared to February’s downwardly revised $453 billion. February’s sales were the lowest in the past five years so this bounce is truly of the dead cat variety. You can see the March dollar gain at the end of the following graph…reading glasses advised.

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Who is Wayne Wile?

Wayne Wile is an international investment advisor with more than five decades of experience in wealth management. He has spent the majority of his career working with institutional and high net worth investors, seeking to mitigate risk while optimizing portfolio performance.

Wayne began work in the mailroom of a brokerage firm when he was 17 years of age and rose to a senior executive position. He was recruited for key jobs with several nationally recognized investment firms in Canada before striking out on his own.

Wayne’s methods as a trader are governed by simplicity and self-discipline. He says that losses are the children of greed and fear while profits are the spawn of patience and trend-following. “Time is always on your side. Let the market tell you what it wants to do and keep it company. Never chase an idea you think you have missed. There is always another one coming along.”

Wayne is especially opposed to sophisticated trading strategies that try to predict the future based on mathematical analysis of historical data. “These systems routinely destroy far more wealth than they create,” he says. “Only a highly intelligent, well-educated individual would be foolish enough to do this stuff. Successful traders need to stop analyzing and learn to listen to what the market is telling them every day.”

Wayne resides in the Cayman Islands but considers himself a citizen of the world.